September 1, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

On August 26 I wrote an article titled The Shifting Landscape of U.S. Meat Processing in which I outlined the long history of consolidation in the industry, eventually resulting in a market dominated by only four major meat packers – Cargill, JBS USA, Tyson, and National Beef Packing. 

This not only strictly limited options for ranchers and cattle operations, but created meat supply chains that are significantly more vulnerable to unforeseen pressures, such as COVID-19  or cyber attacks. 

The recent fallout, including issues concerning plant workers, supply disruptions, price volatility, and consumer hoarding, also drew the attention of Congress, which turned a lens on the industry to examine the level of competitiveness, and to put forward plans and initiatives, including an overhaul of the Packers and Stockyards Act, to support independent operators as they maneuver to gain a share of a hopefully, more resilient market. 

On the ground, however, some ranchers decided to take matters in-hand, raise capital, and launched their own meat processing businesses. I highlighted two such projects – one of which was Sustainable Beef LLC.

Yesterday, Walmart announced it wanted in, backing the endeavor by acquiring a minority stake in the business as part of a broader strategic partnership that aligns with its commitment to increase access to affordable, high-quality beef to its customers, while boosting beef industry capacity for long-term economic viability for ranchers. 

“At Walmart, we are dedicated to providing high-quality, affordable beef to our customers, and an investment in Sustainable Beef LLC will give us even more access to these products,” said Tyler Lehr, senior vice president of merchandising for deli services, meat, and seafood, Walmart U.S.

“We know Sustainable Beef LLC has a responsible approach to beef processing, one that includes creating long-term growth for cattle ranchers and family farmers. This investment provides greater visibility into the beef supply chain and complements Walmart’s regeneration commitment to improve grazing management.”

The Journey

Cattle rancher Rusty Kemp witnessed changes to the industry beginning in the 1970s that eventually resulted in 80 percent of U.S. cattle being slaughtered by only a handful of processors, and the percentage of every food dollar spent that ended up with ranchers and farmers falling from 35 cents to 14 cents, according to USDA data. 

Between 1977 and 1992, the number of livestock slaughter plants in the U.S. dropped from 2,590 to 1,387, according to census data. But Kemp and his partners are looking to reverse the trend.

Under the name Sustainable Beef, Kemp, his partner Trey Wasserburger, another cattle rancher south of North Platte, Nebraska, and their team decided to branch out on their own – a move that they stated is not meant to replace the country’s major meatpackers, but to fill gaps and provide alternatives to regional ranchers that will also boost local economies.

Planning to build a new meat processing facility is not cheap. So Sustainable Beef went to work and raised more than $300 million from ranchers to fund the project. 

A site in North Platte, Nebraska, has been secured with unanimous approval from North Platte’s Community Redevelopment Authority (CRA) for a contract with the group that enables tax increment financing for project infrastructure. 

The CRA acquired the 400 acre parcel for $142,500, which it then sold to Sustainable Beef, where it plans to begin construction this fall on a facility with the capacity to process 400,000 head per year, of which, one quarter will be cows – with all of the meat produced to be sold on the domestic and international markets.

The capital from this investment from Walmart will help Sustainable Beef open their North Platte facility, which is expected to break ground in about a month, and open by late 2024.

“We set out on a journey two years ago to create a new beef processing plant to add some capacity to the industry and provide an opportunity for producers to integrate their business of raising quality cattle with the beef processing portion of the industry and do it in a sustainable manner, said David Briggs, CEO, Sustainable Beef LLC.

Finding its place in the value chain, Sustainable Beef stated it will work with cattle feeders and ranchers to understand the critical elements of the supply chain cycle, including grain sourcing and grazing management.

Animal care carried out by ranchers will follow the Five Freedoms of animal welfare, and antibiotic use and reporting across herds will be expected to take a consistent approach with Walmart’s Position on Antibiotics in Animals, which asks suppliers to adopt and implement American Veterinary Medical Association Judicious Use Principles of Antimicrobials. These guidelines are expected to support Sustainable Beef in improving and refining the beef supply chain and provide quality beef to customers. 

Briggs concluded, “During this journey we found that Sustainable Beef and Walmart aligned on continuing to improve how we care for our animals and crops and provide consumers the positive experience of enjoying quality beef.”

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

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